Vultures of Culture

The tabloids revel in it. Whether it is an airline that wrestles its passengers to the ground, or a CEO that launches a crusade to track down a whistle blower, the media likes little more than high profile examples of a corporate culture that has gone astray.

But the cost to a company that gets caught in the frenzy of a media storm goes well beyond red cheeks and humble pie. It can mean lost revenue and a crushed share price.

So what can you do to assure investors that you are not the next headline writer’s dream?

Reporting on a concept as nebulous as ‘culture’ may seem like a fool’s errand but responsibility for setting values and standards is ascribed to the Board by the UK Corporate Governance Code, so management teams ignore it at their peril. In our experience, there are some simple tips that companies can follow in their communications with shareholders to give confidence that the Board has corporate culture sorted:

Describe your organisation’s culture but, more importantly, how it aligns to goals and objectives.

Explain how you lift culture from the page and turn it into business practice. How is it embedded in recruitment, training, and incentive structures? Can you illustrate how it guides strategic decision-making?

Give examples of how you handle behaviour that is inconsistent with your organisation’s culture – a tricky topic but one that adds greatly to the credibility of reporting in this area.

Outline the processes and controls that are in place to monitor whether behaviour is consistent with your organisation’s culture.

Last, but far from least, make clear who owns your organisation’s culture. Is this an area that is regularly discussed by the Board? Do management take pride in ‘walking the cultural talk?’

Of course, no amount of corporate reporting can plaster over the cracks of a flawed corporate culture. But if you are one of the many companies that have worked hard to create a strong and vibrant cultural norm, then perhaps it is time to help shareholders understand the value that your culture creates.

For more information on reporting on culture, contact Richard Carpenter at MerchantCantos.